How much the club should invest in each type of stock

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The management of a private investment club has a fund of $250,000 earmarked for investment in stocks. To arrive at an acceptable overall level of risk, the stocks that management is considering have been classified into three categories: high risk (x), medium risk (y), and low risk (z). Management estimates that high risk stocks will have a rate of return of 15%/year; medium risk stocks, 10%/year; and low risk stocks, 6%/year. The investment in low risk stocks is to be twice the sum of the investments in stocks of the other two categories. If the investment goal is to have a rate of return of 9% on the total investment, determine how much the club should invest in each type of stock. (Assume that all the money available for investment is invested.)

_____ =250,000

_____= z

_____=22,500

Reference no: EM13987955

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